Predatory Real Estate Wholesaler Act
By: J. David Chapman//Guest Columnist//August 19, 2021
On Nov. 1, the Predatory Real Estate Wholesaler Act will officially go into effect in Oklahoma, requiring real estate wholesalers to obtain a real estate license and abide by Oklahoma laws designed to promote consumer protection and ethical practices. The practice of real estate wholesaling occurs when an individual enters into a real estate purchase contract with a homeowner and subsequently markets and sells an assignment of that contract to a third party for a profit.
Wholesaling has generated complaints about misleading sales tactics, predatory contracts, and clouding title to properties. Further, many Oklahomans who agree to sell their homes to a wholesaler are upset when they learn that the person or entity who offered to purchase their home is actually assigning the purchase contract to a third party for a profit instead of purchasing it themselves.
Many of the advertisements, calls, and letters that homeowners receive offering to buy their homes are actually real estate wholesalers seeking to enter into a purchase contract that they can sell to a third party for a profit. With an increasingly seller-friendly real estate market, the practice of wholesaling has become more prevalent, and thus its associated problems.
Oklahoma is among the first states to take action to address the issues created by this growing trend. Oklahoma’s common-sense approach of requiring wholesalers to obtain a license and abide by the same laws and regulations as other real estate professionals will help increase accountability and protection for the public. While the barrier to obtain a real estate license is fairly low, the benefits that licensure requirements provide for the public are substantial. Oklahomans can rest assured that a real estate license holder has passed a felony background check and a real estate examination that is administered nationally to all real estate sales associates and brokers.
After obtaining a real estate license, wholesalers will now be required to comply with the Oklahoma Real Estate License Code, which mandates a number of common-sense duties and responsibilities that cannot be waived. The Predatory Real Estate Wholesaler Act reflects a simple truth – that real estate professionals often gain unique access to our homes and help represent Oklahomans in some of the largest financial transactions they will ever make. As such, it’s important to make sure our citizens are protected. With this reality in mind, I’m pleased to see Oklahoma proactively leading the country on an emerging issue.
J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).